Oglebay Norton Co. v. Armco Inc.


–          1957 – Relationship began where Armco would use Oglebay to ship their iron.

–          Contract included primary and secondary price mechanism.

  1. (Primary) Armco agrees to pay…regular net-contract rates for the season for transportation of ore as recognized by leading iron ore shippers
  2. If no regular net contract rate can be recognized, parties shall mutually agree upon a rate for transportation- taking into contract rate for consideration.

–          Next 23 years, re-structured contract 4 times.

–          1957-83 – used contract’s primary shipping method.

–          1984, Armco challenged the rate, and they mutually agreed on a new rate.

  • In 1986, parties were unable to agree on a rate.
  • Oglebay sought declaratory judgment asking the court to declare the contract rate to be the correct rate, or in the absence of such a rate, to declare a reasonable rate.
  • Parties continued to perform pending resolution of the suit – in 1987, Armco filed a counter-claim seeking that the contract was no longer enforceable.

Procedural History

–          Trial court issued a declaratory judgment fixing a rate of $6.25 for 1986 – as well as being able to appoint a mediator for future problems.

Defendant’s argument

  1. Contract was no longer enforceable.

–          Breakdown of primary and secondary pricing mechanisms renders the 1957 contract unenforceable….Parties never manifested an intent to bound in event of breakdown of both pricing structures.

  • Impossible to ascertain new prices after 1985.

2. Trial court lacked jurisdiction to impose shipping rate of $6.25.

3. Trial court lacks equitable jurisdiction to order parties to negotiate or to mediate up until 2010.


1. Did the parties intend to be bound by the terms despite failure of primary and secondary arrangements?

2. If parties did intend to bound may the trial court be allowed to establish a 6.25 rate?

3. May the trial court continue to exercise its equitable jurisdiction over the parties and is the court allowed to utilize a mediator if they are unable to mutually agree.


– Yes on all three questions.


1. The parties intended to be bound despite failure of pricing mechanisms.

  • Long-standing relationship of parties, joint ventures, interlocking directorates, and ownership of stock.
  • Parties continued to perform pending 1987 dispute.
  • Parties contractually recognized Armco’s vital and unique interest in Oglebay’s vessel fleet.

2. Since parties intended to be bound, trial court stated it had authority to determine a reasonable mechanism since the contract failed to do so.

  • When parties intend to be bound, “the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency.”
  • Based this upon parties extensive course of dealings.
  1. Trial court did not exceed its jurisdiction.
  • Specific performance was necessary.
  • Other performances were too hard to figure out.
    • Fluctuation of prices, and long-standing relationship would be impossible to create damages.
    • Since parties intended to be bound, the court did not exceed jurisdiction.


– Affirmed.


– Couldn’t get damages so forced performance.

Comments are closed.